Scottish Power to add £104 a year to bills as families name energy prices as 'biggest threat' to their finances

Scottish Power has become the latest energy company to force up bills for millions of customers following price hikes from larger rivals British Gas and nPower last week.

The company will put up its gas and electricity prices by an average 7 per cent – adding £104 a year to typical bills – from 3 December. The majority of customers, however, will face a near-9 per cent hike.

It blamed the Government's drive for renewable energy, the cost of delivering energy and rising 'wholesale' prices. A spokesman said that it had 'absorbed' the extra costs for as long as possible to 'minimise the impact on customers.'

Take a hike: Scottish Power announced as 7 per cent rise in gas and electricity bills for 3.2million customers.

Duel fuel monthly direct debit customers, which make up 60 per cent of those affected, will see an increase of 8.7 per cent, bringing their average bill up to £1,271 from £11.60 per year – adding £110 to annual bills.

Customers who pay via prepayment meters, around 550,000 customers, will also get the same rise, adding £117 to their average annual bill, a total of £1,349 per year up from £1,232.

While, customers who pay quarterly by cash or cheque are only seeing a 1.4 per cent increase, adding £19 a year, bringing their annual average cost to £1,368.

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Scottish Power is the fourth of the ‘big six’ energy firms to announce a price increase for the coming winter. On Friday, British Gas and nPower said their customers would pay, on average, £100 and £80 more, respectively.

A price increase announced by
Scottish and Southern Energy (SSE) in August kicked in today adding 9
per cent - or £100 – a year to bills.

EDF
Energy and E.ON are the only major energy firms not to announce a price
change although the latter has guaranteed not adjust prices until the
end of the year.

Ann
Robinson, director of consumer policy at comparison website
uSwitch.com, said: ‘Another winter and another round of price hikes, so
far affecting almost 19 million households.

'Today’s
move will be no surprise, but consumers will be disappointed and angry
that these increases will be hitting them in the winter when the blow
will be felt hardest.'

Scottish Power blamed a combination of rising costs for the hike:

the cost of Government schemes had gone up by 34 per cent;

transportation costs were up 11 per cent;

an 8 per cent rise in wholesale costs.

Energy
firms have been criticised in the past for all raising prices at the
same time, rapidly passing on rising costs and failing to cut bills as
quickly when wholesale costs fall.

Suppliers
blame the complex way energy is traded but consumer groups say that
this creates a lack of trust in the industry between them and customers.

Adam Scorer, director of energy at Consumer Focus, said: ‘Every time this happens it makes it difficult for consumers to believe that price rises are driven by real supply and demand issues. It feels as if companies raise prices in a pack because they see safety in numbers.

‘This does not mean that wholesale price pressures are not real, that companies don’t need to make a profit or that companies should not act to minimise the impact of a price rise on their reputation. But there is so much at stake in the energy market at the moment.'

Research today also warned that people are more concerned about rising energy prices than they are about unemployment, inflation and taxes.

The YouGov’s Household Economic Activity Tracker (HEAT), where consumers rate dangers on a one to 10 scale, said that rising energy prices, with a 7.8 score, were the ‘biggest threat’ to family finances in the coming year.

Unemployment the second biggest perceived threat at 7.4, with rising inflation third at 6.9.

Joe Twyman, director of political and social research at YouGov, said: ‘The UK’s consumers are aware that Britain’s major energy suppliers are all expected to raise prices over the next few months, and the results of our survey clearly indicate they are very concerned about the impact that change will have on their household’s finances.'

HOW CAN YOU CUT YOUR ENERGY BILL?

If you're never switched before then you can save around £350 just by switching, according to comparison websites.

The quickest and simplest way to cut bills is to sign up for an online tariff paying by direct debit as these are usually the cheapest tariffs.

However, if you've already done this there are still ways to cut your bill. You should consider locking into a fixed tariff - these will offer a price guarantee for fixed term, usually one or two years.

Fixed tariffs are always a gamble as if prices come down and you want to switch you will have to pay an exit fee. However, there are some tariffs on the market which do not have any penalties for leaving.